South Africa’s largest general insurer, Santam has released its reviewed interim report and ordinary dividend declaration for the six months ended 30 June 2024.
South Africa’s largest general insurer, Santam has released its reviewed interim report and ordinary dividend declaration for the six months ended 30 June 2024.
The report released on Thursday includes the number of claims that have been paid during those months, with gross claims amounting to R14.2 billion. While in 2023 it was R14.6 billion.
Tavaziva Madzinga, the Santam Group CEO said the period was also impacted by unpleasant weather conditions which resulted in the insurer paying millions in weather-related claims.
Madzinga said they paid R607 million in weather-related claims during the first half of 2024.
“This compares to weather-related catastrophe losses of R150 million in 2023.”
He noted that the environmental claims have presented headwinds for the general insurance industry. There has been a severity of losses from unpleasant weather conditions over the past decade.
The millions in weather-related claims can be attributed to the conditions across the Western Cape, Eastern Cape and KwaZulu-Natal.
The report also detailed that the underwriting actions implemented at Broker Solutions and Client Solutions significantly improved the risk profile and rating strength of the group’s in-force book.
“This created positive earnings momentum, which, together with favourable attritional loss experience, more than offset the R197 million increase in weather-related catastrophes and other significant losses within these business units.”
In 2023, the Crop and Marine businesses incurred several large claims compared to a more benign claims environment.
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Santam has acknowledged that things might get worse as far as weather-related claims are concerned.
“The La Niña effect is expected in the third quarter of 2024, this is anticipated to lead to increased rain alongside the traditional hail season in Q4. These factors add some volatility to the underlying underwriting margin.”
La Niña is a complex weather phenomenon characterised by cooler-than-average sea surface temperatures in the eastern Pacific Ocean, which can impact global weather patterns, leading to increased rainfall and extreme weather events in certain regions.
He adds that the general operating conditions are not expected to improve markedly in the remainder of 2024. Investor and business sentiment appears to be positive following the general elections in South Africa and an improvement in Eskom’s electricity availability factor.
“As Santam, we remain confident in the group’s prospects and the potential to deliver enhanced growth and profitability, as our FutureFit 2030 strategy has been tailored for the environment in which we operate. The management actions implemented to date, which we continue to roll out, create positive momentum into the year’s second half,” said Madzinga.
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